What does a Trustee do
after the Settlor dies?
How do you settle the estate?
What happens when it is time to settle the trust after a death? The “Successor Trustee” is the person who is named in the trust document as the successor to the Initial Trustee (Settlor), and assumes control of the trust when the Initial Trustee passes away.
Since every trust estate is unique and there are literally hundreds of potential issues in settling any trust estate, it is impossible to determine in advance exactly what will need to be done when an Initial Trustee passes away. This article is limited to some of the most common trust settlement issues.
A complete trust settlement can be divided into these general phases (note: this list is a broad overview, so consult with your attorney about what to do specifically for your situation). (CLICK HERE FOR A DETAILED LIST)
Wrapping up the Decedent’s Financial Affairs
The Successor Trustee needs to meet with attorneys, accountants, appraisers and other family members. A good professional settlement team will guide the Successor Trustee through the trust settlement process. In that process, the estate planning attorney will need various documents to properly counsel the Successor Trustee, such as Certificate of Death; original will, trust and amendments; Deeds of Trust, statements and beneficiaries from financial institutions, and a list of heirs and beneficiaries with detailed information.
As Successor Trustee, here are some of the items to attend to:
- Funeral Arrangements
- Death Certificates
- Subscriptions/Memberships
- Closing Safe Deposit Box
- Creditors, Bills and Expenses
- Canceling Monthly Benefits
Filing Legal Notices and Other Documents
The Successor Trustee is responsible for filing and distributing several notices and documents, including:
- Providing all trust documentation to all beneficiaries
- Notifying the Director of Health Services
- Filing the Will with the County Clerk
Compiling the Inventory and Appraisement
A formal Inventory and Appraisement is required by law for probate estates, but it is not required for trust settlements. Nevertheless, it should be done for trust settlements, and, in fact is probably the most important step in the trust settlement process.
The Inventory and Appraisement is a single document that lists every single asset with the decedent’s name on it, whether or not it is in the trust. Invariably, decedents with revocable living trusts also have assets that they did not transfer to the trust, intentionally or unintentionally; these must be included in the Inventory as well.
Managing the Estate
Until all assets are sold and dispersed, the Successor Trustee has several important responsibilities, including:
- Preserving Assets
- Record Keeping
- Determining Cash Needs
- Managing Asset Sales
- Handling Disputes
Distribution
When and how assets are transferred is very important. Each asset is transferred individually, and how an asset is transferred depends on the requirements of the institution that holds it (such as a bank, brokerage firm, insurance company, etc.). The Successor Trustee needs to check with each institution in order to know how an asset should be transferred. These include:
- Real Property
- Bank Accounts
- Brokerage Accounts
- Stocks .
- Insurance Policies
- Retirement Accounts (IRAs, 401Ks, Keoghs, Tax Deferred Annuities)
- U.S. Treasury Securities (Bills, Notes, Bonds, U.S. Savings Bonds)
(CLICK HERE FOR MORE INFORMATION)
Filing Tax Returns
The Successor Trustee is strongly urged to seek the advice and/or services of a Certified Public Accountant who specializes in the preparation of decedents’ returns. There are many instances where the incorrect preparation of the return cost an estate tens of thousands of dollars in unnecessary taxes, penalties and interest. If a referral to a qualified CPA is needed, please call our office.
Specialized Estate Administration Expertise
Remember that every trust estate is unique, with its own potential issues to be settled. This article is an overview of some of the most common trust settlement issues — it should not be used without consulting an attorney. At the time of the death of a trustor, the Successor Trustee is strongly encouraged to discuss your individual trust settlement issues with the attorneys of Mortensen & Reinheimer, PC. Please contact us at (714) 384-6053 to make an appointment, or use our online contact form. Our website is http://www.ocestateplanning.net.
About the author:
Tamsen R. Reinheimer, Attorney, is a Certified Specialist in Estate Planning, Trust & Probate Law (The State Bar of California Board of Legal Specialization). She has significant experience in all aspects of estate planning, trust administration, and probate. Contact Tamsen at tamsen@ocestateplanning.net.